Gold and silver prices were under pressure in the Indian commodities market on Tuesday, August 18, as investors booked profits after a strong rally in the previous trading session. Rising crude oil prices, higher US Treasury yields and concerns over inflation added to pressure on precious metals.
The MCX gold rate for October futures fell by ₹780, or 0.50%, to ₹1,55,160 per 10 grams. Gold touched an intraday low of ₹1,54,925, down more than ₹1,000 from the last close.
Silver also fell sharply. The MCX September silver futures contract fell by ₹2,651, or 1.11%, to ₹2,35,397 per kg. It touched an intraday low of ₹2,35,201 during the session.
Why are gold and silver prices falling?
The price of precious metals fell on Wednesday after the previous day’s heavy rally, and investors took profits.
Another factor weighing on gold was the rise in crude oil prices. Higher oil prices could put inflationary pressure on the market and maybe even impact expectations of monetary policy in the United States.
Investors are watching the US Federal Reserve’s interest rate outlook closely. Higher interest rates and Treasury yields can make non-yielding assets like gold less attractive.
After the recent rally in gold prices, investors were taking profits, Jigar Trivedi, Senior Research Analyst at IndusInd Securities, said. Gold could remain under pressure if oil prices and US Treasury yields continue to rise, he said.
At the same time, expectations that the US Federal Reserve may not raise interest rates in September and weakness in the US dollar could provide some support to gold.
Trivedi also pointed to growing investment demand from China as one of the factors currently supporting the precious-metal market.
Gold Price Outlook: Key Support and Resistance Levels
Market analysts have identified important technical levels that traders will be watching closely.
Trivedi expects MCX gold support around ₹1,55,000–₹1,54,800 and resistance in the range of ₹1,55,600–₹1,55,800.
According to Ponmudi R, CEO of Enrich Money, the immediate support for MCX gold is in the range of ₹1,53,300–₹1,52,700. The next big support zone is ₹1,50,700–₹1,50,000.
On the upside, the resistance is expected around ₹1,56,000–₹1,56,500. A sustained move above that range would open the way towards the next resistance zone of ₹1,58,000–₹1,58,600.
Ponmudi said that the Relative Strength Index (RSI) was 67.05, and momentum had cooled somewhat from its recent peak, but the overall trend was still bullish.
Gold is now cautiously positive in general as long as it remains above ₹1,53,300. A hold above that level could see gold recover to ₹1,56,500, and a break below ₹1,52,700 could result in a deeper correction.
Silver Price Outlook
Silver also remained under pressure today.
Trivedi provided immediate support for MCX silver at ₹2,34,600–₹2,33,500, while resistance is around ₹2,37,000–₹2,38,000.
Ponmudi identified immediate resistance at ₹2,40,000–₹2,41,000. A decisive move above that zone could take silver towards the next resistance range of ₹2,45,000–₹2,46,000.
On the downside, immediate support is at ₹2,32,000–₹2,31,000 and stronger support around ₹2,26,000–₹2,25,000.
Silver RSI was at 57.23 and was down from recent highs. It is a reflection of the overall consolidation in precious metals.
Silver is still a little cautious above ₹2,32,000. A sustained hold above this level could support prices in the direction of ₹2,41,000. A break below ₹2,31,000 could make a deeper correction towards ₹2,26,000 more likely.
What should gold and silver investors watch?
Investors will keep track of crude oil prices, US Treasury yields, dollar movements, and expectations of Federal Reserve policy.
For gold, the ₹1,53,300–₹1,52,700 zone will be the most important from a technical point of view. For silver, traders will be watching to see if prices can hold above ₹2,31,000–₹2,32,000.
Despite Tuesday's fall in gold, analysts still see a broadly positive longer-term trend in gold, although short-term volatility and profit booking may persist.
Gold and silver prices and technical levels mentioned in this article are based on data from the market and analyst views and are only for informational purposes. Commodity prices can change very quickly. Investors should conduct their own research and consult a qualified financial adviser before making an investment decision.
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